Wednesday, April 25, 2018

AT&T's Q1 revenue dips 1% yoy, but net income rises - FirstNet rollout underway

AT&T reported a slight dip in overall sales in Q1 but higher net income even as CAPEX rises for network upgrades, fiber upgrades, and FirstNet rollouts. The company said it is on track to launch 5G mobile services in a dozen U.S. cities this year.

“We’re off to a good start in 2018, both in growing our customer base and in building the world’s premier gigabit network,” said Randall Stephenson, AT&T Chairman and CEO. “Our investment in customer growth and our integrated service offerings helped drive solid first-quarter subscriber gains across our wireless, video and broadband businesses. We also moved quickly to deploy FirstNet, and we expect the buildout to accelerate as we go forward. Our fiber deployments for business and residential customers now pass more than 16 million customer locations. And we’re set to launch our next-generation DIRECTV NOW platform, which will offer cloud DVR and an additional video stream.”

Revenues for the first quarter totaled $38.0 billion versus $39.4 billion in the year-ago quarter, primarily due to the impact of new accounting rules for revenue recognition (ASC 606) which included netting of USF with operating expenses. On a comparative basis, declines in legacy wireline services, domestic video, and wireless service revenues, were partially offset by growth in wireless equipment and strategic business services. On a comparative basis, revenues were $38.9 billion, a decrease of 1.1%. Operating expenses were $31.8 billion versus $33.0 billion primarily due to the netting of USF and other regulatory fee revenues and the deferral of commissions under ASC 606. Excluding those impacts, operating expenses were $33.4 billion, an increase of about $350 million due to higher wireless equipment costs.

Net income attributable to AT&T was $4.7 billion, or $0.75 per diluted share, versus $3.5 billion, or $0.56 per diluted share, in the year-ago quarter.

Cash from operating activities was $8.9 billion, and capital expenditures were $6.1 billion. Capital expenditures included about $140 million in FirstNet capital costs and no FirstNet reimbursements.

Wireless highlights

  • Strong year-over-year improvement in postpaid phone net adds
  • Continued prepaid growth with 192,000 phone net adds
  • Nearly 500,000 branded smartphones added to base
  • Q1 postpaid phone churn of 0.84%
  • 3.2 million total wireless net adds, including 2.6 million in U.S., driven by connected devices and prepaid, and 543,000 in Mexico

Entertainment Group highlights

  • 312,000 DIRECTV NOW net adds to reach nearly 1.5 million subscribers
  • 125,000 total video net adds with DIRECTV NOW stabilizing total video customer base since DIRECTV acquisition
  • 154,000 IP broadband net adds; 82,000 total broadband net adds; more than 8 million customer locations passed with fiber

See also